ANGLO AMERICAN PLATINUM MOGALAKWENA MINE SITE VISIT 11 th February - - PowerPoint PPT Presentation

ANGLO AMERICAN PLATINUM

MOGALAKWENA MINE SITE VISIT

11th February 2015

Real mining. Real people. Real difference.

NEW PHOTO Wanda

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CAUTIONARY STATEMENT

Disclaimer: This presentation has been prepared by Anglo American Platinum Limited (“Anglo American Platinum”) and comprises the written materials/slides for a presentation concerning Anglo American Platinum. By attending this presentation and/or reviewing the slides you agree to be bound by the following conditions. This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy shares in Anglo American Platinum. Further, it does not constitute a recommendation by Anglo American Platinum or any other party to sell or buy shares in Anglo American Platinum or any other securities. All written or oral forward-looking statements attributable to Anglo American Platinum or persons acting on their behalf are qualified in their entirety by these cautionary statements. Forward-looking statements This presentation includes forward-looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding Anglo American Platinum’s financial position, business and acquisition strategy, plans and objectives of management for future operations (including development plans and objectives relating to Anglo American Platinum’s products, production forecasts and reserve and resource positions), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American Platinum, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Anglo American Platinum’s present and future business strategies and the environment in which Anglo American Platinum will operate in the future. Important factors that could cause Anglo American Platinum’s actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the availability of mining and processing equipment, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or safety, health, environmental or other types of regulation in the countries where Anglo American Platinum operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American Platinum’s most recent Annual Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this presentation. Anglo American Platinum expressly disclaims any obligation or undertaking (except as required by applicable law, the Listings Requirements of the securities exchange of the JSE Limited in South Africa and any other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Anglo American Platinum’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Nothing in this presentation should be interpreted to mean that future earnings per share of Anglo American Platinum will necessarily match or exceed its historical published earnings per share. Certain statistical and other information about Anglo American Platinum included in this presentation is sourced from publicly available third party sources. As such it presents the views of those third parties, but may not necessarily correspond to the views held by Anglo American Platinum. No investment advice This presentation has been prepared without reference to your particular investment objectives, financial situation, taxation position and particular needs. It is important that you view this presentation in its entirety. If you are in any doubt in relation to these matters, you should consult your stockbroker, bank manager, solicitor, accountant, taxation adviser or other independent financial adviser (where applicable, as authorised under the Financial Advisory and Intermediary Services Act 37 of 2002 in South Africa).

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AGENDA

• 07:00 Introduction from the CEO
• 07:15 Mogalakwena operation presentation
• 07:55 Q&A session
• 08:20 Departure to Mogalakwena mine
• 09:30 Arrival and in-pit experience
• 12:00 Lunch
• 12:45 North concentrator visit
• 14:30 Departure

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Overview of 2015

Chris Griffith, Chief Executive Officer

Managing the business… …for the low PGM price environment

• Zero harm remains the priority
• PGM pricing remains challenging
• All operations cash positive
• R4 billion of free cash flow generated from
• perations
• Net debt reduced to R12.8 billion from R14.6

billion

• Rightsizing the business – with R1.0 billion
• verhead savings identified
• Continuing with the repositioning of the portfolio
• Earnings significantly impacted by one-off

impairments and restructuring costs

Net debt profile (R billion) Headline earnings per share (R/share)

11,5 14,6 12,8 2013 2014 2015 5,56 3,01 0.41 4.12 (excluding

• ne-off items)

2013 2014 2015 4.52

Overview of 2015

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Total platinum production (koz) Pipeline & refined platinum inventory (koz)

440 440 450 440 130* Dec-13 Dec-14 Jun-15 Dec-15 427 212 156 200 Dec-13 Dec-14 Jun-15 Dec-15 Pipeline inventory Refined inventory 2 356 1 870 2 337 2013 2014 2015

*130 koz stock count adjustment

Loss-making ounces cut…efficiencies improving at profitable operations… …enabling production performance to return to pre-strike production levels

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Operational performance in 2015

• Platinum production of 2,337 koz, up 25%

– Mogalakwena production up 6% to 392 koz – Amandelbult production up 100% to 437 koz – Unki production up 7% to 66 koz

• Production cuts of c.350 koz made up by

productivity improvements

• Non-core operations, Rustenburg and Union,

continuing operational improvements through

• ptimised mine plans
• Joint ventures total production of 768 koz
• Pipeline inventory back to normalised levels
• Refined inventory of 200 koz

Total refined platinum production (million ounces) Total platinum sales volume (million ounces)

2,53 2,39 2,38 1,89 2,46 2011 2012 2013 2014 2015 2,61 2,17 2,35 2,11 2,47 2011 2012 2013 2014 2015

Refined production back to normal levels… …supplemented by drawdown in inventory…leading to increased sales in 2015

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Refined production & sales volume in 2015

• Platinum

– Platinum refined production up 30% to 2,459 koz – Platinum production of 2,337 koz – Drawdown in pipeline inventory to normalised levels – Platinum sales up 17% to 2,471 koz

• Palladium and Rhodium

– Palladium refined production up 30% – Rhodium refined production up 33%

• Base metals

– Base metal refinery tonnes up 26% as production normalised post 2014 strike – No further tolling arrangement as stockpiles all treated

Mogalakwena Amandelbult Unki BRPM Modikwa Processing Mototolo Rustenburg Union Twickenham Pandora Bokoni Kroondal

Retained assets Exit assets Care & maintenance

1

High quality assets

2

Low cost production

3

High margin ounces

4

Reduced safety risks Restructuring since 2013… …now repositioning the portfolio…

• 1. Reshape Rustenburg & exit
• Optimised and integrated 5 mines to 3 in 2013
• Further consolidation to 2 in 2015
• Volume reductions ~210koz Pt
• Sale agreement signed in 2015 with Sibanye Gold
• 2. Reshape Union & exit
• Consolidated Union North and South Mines
• Closed the North and South declines
• Volume reductions of ~80koz Pt
• Prepare for exit through sale in 2016
• 3. Simplify JV portfolio & maximise value
• Consider exit options for Bokoni and Pandora
• Bokoni mine optimised. Restructuring and shaft closures

in 2015

• 2016 decision to exit Kroondal for value

…to generate long term value

Focus remains on repositioning the portfolio… …to generate long term value through the cycle

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Repositioning the portfolio

Overhead cost reductions (R billion)

5.4 3.4 (0.8) (0.7) (0.3) (0.2) 2014 Overhead Reduction Rustenburg Exit Union Exit 2017E

(37%)

• Cash generation

– Ensure all operations are cash flow positive –

• ptimised mine plans

– Commencing the process towards placing Twickenham on care and maintenance

• Reorganisation

– Consolidation of mines and concentrators with correct support structure – Repositioned portfolio – smaller and less complex

• Cost reduction

– Reduced c.400 indirect jobs saving R200m per annum – Reducing indirect costs by R800m per annum

• Capital discipline

– All major capital project decisions delayed until at least 2017

Focus on cash generation, capital discipline… …and cost rationalisation

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Managing for the current environment

• Platinum production between 2.3 – 2.4 million ounces
• Unit cash cost guidance: R19,250 – R19,750 per platinum ounce (metal in concentrate)
• Direct overhead savings and indirect savings of R1.0 billion identified
• Capital expenditure guidance: R3.7 billion – R4.2 billion
• Repositioning of the portfolio to continue – anticipate Rustenburg disposal completed by the

end of 2016

• Progress the sale of Union, Bokoni, Pandora and assess value exit options for Kroondal
• Commencing the process towards placing Twickenham on care and maintenance
• All mining complexes are cash positive at current spot prices and FX rates

…for the year ahead

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2016 outlook

Guidance and outlook…

Mogalakwena operation

Richard Cox, General Manager

Mogalakwena mine – location

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• The

Northern Limb

• f

the Bushveld Complex is located in the Limpopo Province of SA

• The

Northern Limb is approximately 120km in length and a significant source of future platinum production in SA

• Anglo

American Platinum

• perates

the Mogalakwena

• pen pit mine – currently the
• nly
• perating

mine

• n

the Northern Limb

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Mogalakwena leadership team

SAFETY

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Lost time injury frequency rate

• Mogalakwena operation benchmarks favourably with

international best practice safety performance

• The team is at an advanced stage in the

implementation of the safety improvement plan

• Notable recent safety achievements:
• 1. North concentrator

489 days LTI free

• 2. South concentrator

315 days LTI free

• 3. Mining

215 days LTI free

• 4. Mogalakwena operation

3.6 million ffs* (3½ years)

Safety performance

0.42 2012 2013 0.36 2011 0.45 Rate per 200 000 hours 0.20 0.15 2015 Bench- mark 2014 0.21 0.17 ffs = fatality free shifts

RESOURCES

• Mogalakwena is situated within

the 120km strike of the Northern Limb of the Bushveld Complex

• The main mineralised horizon is

the 30 – 100m thick Platreef

• Platreef dips at 40º towards the

west 120km

E’

Geological setting

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Resource endowment

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3,000 3,500 4,000 2,000 2,500 500 1,000 1,500 3,712 2014 2012 2010 Inferred 2011 2013 2009 2008 2015 Indicated 2007 2006 Mt Measured

Mineral resources Published inclusive mineral resources

Mineral resources are highlighted as green shaded area in section view, constrained by: 1. Mining lease 2. Depth below surface of 750m 3. Cut off applied to the resource of 1 g/t 4E 4. Significant pre resources below 5. Note: pit shells are not used to constrain resources

Waterberg PGM Platreef Ivanhoe Mines Kwanda North Atlatsa/Anglo Plat Tweespalk PGM Boikgantsho Anglo Platinum Harriet’s Wish Sylvania Central Block Atlatsa Akanani Lonmin

Activity

Mining Actively exploring Not exploring Project Southern Platreef +120km Mogalakwena Anglo Platinum

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• Apart from Mogalakwena, no other mining activity

within the Northern Limb

• Ivanhoe Mines is actively developing their underground

project and busy with characterization/early access shaft

• PGM developing Waterberg resource on recently

discovered Main Zone reefs – extended their prospecting area significantly

• Lonmin completed an underground pre feasibility study
• n Akanani
• Anglo American Platinum is currently developing

strategies to optimise the footprint that includes Boikgantsho, Central Block and Kwanda North

Regional activity

24km

N

Upper zone Main zone norite Critical zone / Platreef Dolomite Hornfels / Banded iron stone Granite footwall Magnetite / Harzburgite

SS ZS MN ~250m ↕

Waterberg sediments Existing open pits

Regional lithology

• Anglo Platinum’s understanding of the

genesis of the Northern Limb is maturing:

• drill hole logging
• re formation process models
• Likely different mining methods will be adopted to exploit the

Northern Limb resource

• Mogalakwena open pit mine is unique within the Northern Limb

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REPLANNING THE MINE

Mining strategy improvements

Cost reduction driving NPV

• Optimised cut back schedule
• Leading to lower and stable

stripping ratio

• Stockpile levels minimised
• Strike extensions preferred to

down dip pushbacks

10 20 30 40 50 100 150 200 250 2014 2024 2034 2044 2054 2064 Stripping ratio Tonnes mined (Mt)

Old plan Optimised plan Old plan strip ratio Optimised plan strip ratio

Ongoing concentrator improvements & debottlenecking Debottlenecking & further options

150 250 350 450 550 650 2012 2014 2016 2018 2020 2022

Platinum (koz)

300 – 360 c.420 c.600

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1 2 3

6 8 10 12 14 40 50 60 70 80 2012 2013 2014E 2015E 2016E 2017E Tonnes milled (Mt) Waste tonnes mined (Mt) Waste mined Tonnes milled

2014 commitment

300 360 After improvements Status quo 20% 420 360 600 After improvements De-bottlenecking & beyond 17%

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2016 reality

What we said in 2014 What we have achieved What is yet achievable

Debottleneck MNC 925tph → 1,200tph MNC 925tph → 1,010tph MNC 1,010tph → 1,050tph R2 billion capital project to debottleneck MNC:

• R1.3 billion for dry section
• R0.7 billion for wet section

Asset management implemented since 2014:

• defect elimination
• condition monitoring
• decoupling wet section from dry section
• R200 million

Hydraulic capacity upgrades to MNC in 1Q2016:

• primary rougher tail pump
• final tail pump

Commence construction in June 2015 Operating model implementation in 2015 Maintain recovery despite increased throughput:

• Conversion of ultra fine grinding mill to 5th

main stream inert grinding mill

First ounces from project mid 2017 Optimised toll concentrating in 2015 Mogalakwena Pt 392koz → 400koz Mogalakwena Pt 360koz → 420koz Improved recovery from MNC circuit reconfiguration in 2015 Debottlenecking project is being rescoped Additional volume mined afforded increased short term cut off grade impacting head grade Third concentrator expansion project as an alternative business case Mogalakwena Pt 360koz → 392koz Significant reduction in stripping ratio from

• verall slope angle optimisation will yield

further opportunities

MNC = Mogalakwena north concentrator

• Record production performance – up 6% to

392 koz

• Unit costs reduced 7% in 2015 due to cost

management and productivity initiatives

• Highest Rand basket price in the portfolio at

R32,850 per platinum ounce

• Generated R4.4bn of economic free cash

flow

• Cash operating margin maintained at 50%

despite weaker prices Platinum production (metal in concentrate) Cash operating margin (%)

Delivering value

16 22 23 369 2014 348 325 370 2013 341 2012 305 2015 392 Mogalakwena Baobab

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2015 2014 35,624 2013 50% 49% 32,850 27,385 46% 30,130 2012 39% Rand basket price Cash operating margin

OPERATIONAL PERFORMANCE

1. Safety performance 2. Total tonnes mined 3. Ore tonnes mined 4. Grade 5. Throughput 6. Recovery 7. Pt ounces produced 8. Cash after cost 4

Improving trend 8.5Mt in January 2016 Healthy stockpiles Mine to plan adherence Record average tonnes milled per day in November 2015 Continuous improvement 392koz for 2015, record in January 2016 Year-on-year improvement

2013 2012

Confident outlook for 2016

2015 2014 2016

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Frequency

MOGALAKWENA MINE

Daily tonnes mined kt

25 50 75 100 125 150 175 200 225 250 275 300 325 350 10 20 30 40 50 60 70

Mean = 247 +1 Sigma (e) = 277

• 1 Sigma (e) = 217

+3 Sigma (e) = 337

• 3 Sigma (e) = 157

kt

MOGALAKWENA MINE

Daily tonnes mined

Set 3: UCL = 338; Mean = 247; LCL = 157 (2015-04-22 - 2016-01-13) (mR = 2)

2013-12-12 2014-03-12 2014-06-10 2014-09-08 2014-12-07 2015-03-07 2015-06-05 2015-09-03 2015-12-02

50 100 150 200 250 300 350

Tonnes mined

• The mining team is out performing targets and

has improved upon both delivery and creation of process stability

• Greater focus upon improvements in

fragmentation from blasting optimisation initiatives since 4Q2015 is yielding results

• Increased mining depth has impacted hauling

distance and two Komatsu 930E haul trucks have arrived to site to offset the hauling rate reduction

• Operating model implementation is underway to

further reduce variability

• The analyse and improve approach based upon

root cause and risk analysis is reducing both the incidence and impact of special cause events

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• Red Button’s compendium is able to benchmark

the fleets of 170 operations globally

• Mogalakwena benchmarks in the top 10% of all

global truck fleets

• We are pursuing identified saving opportunities of

R20m over the next 5 years:

• engine repair costs
• wheel motor repair costs
• alternator repair costs

Overall equipment effectiveness

Red Button benchmark - overall equipment effectiveness Komatsu 930E truck fleet hours for 2015

DT69 DT77 DT71 DT65 DT68 DT61 DT70 6,000 DT73 DT75 DT62 DT63 DT74 DT66 DT60 DT67 DT78 DT64 DT72 Ø 6,366 DT76

Industry best practise

Frequency 20% 50% Overall equipment effectiveness (avail.% x util.% x productivity %) 70% 60% 40% 80% 30%

930E OEE = 71% P94 930E OEE = 68% P88 Global best in class Current performance

100,000 80,000 40,000 60,000 2,000 1,500 1,000 500 20,000 Equipment operating hours Cumulative costs (Rand/hr)

Whole of life forecast – 930E fleet

Global cost distribution

Actual Forecast

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Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

• 2015 daily control chart representing 11.7

million tonnes aggregate throughput of MNC, MSC & Toll treat concentrators

• Mean daily throughput of 32 119 tonnes
• Set points, run time and shut maintenance

schedule precision

• November 2015 performance exceeded the

mean daily throughput by 13% (new record)

• Focus upon root cause analysis of common

cause events

• Operating model at MNC assisting with

creating stability

• MSC planned for Operating model roll out in

2016

Concentrator performance

Mean = 32 119 P75 = 37 730 C80 = 31 558 P75 @ 88.4% runtime = 12 180kt

2015 daily tonnes milled

mean

Record daily average tonnes milled of 36 318

P75 29

MNC = Mogalakwena north concentrator MSC = Mogalakwena south concentrator Toll treat = Baobab concentrator (Lonmin)

Operating costs

• 42% of mining costs are foreign currency based
• Diesel consumption accounted for approximately 17%
• f mining cost
• Mining unit cost has been flat for three years with

business improvement initiatives having impact

• Higher mining rate afforded the opportunity to apply a

short term cut off strategy resulting in increased feed grade (+5%)

• 11% of concentrator costs are foreign currency based
• Runtime for concentrators was impacted largely by

the community unrest period and project tie-ins at MNC

• Improved recovery from MNC circuit reconfiguration

added significant value

• Operating model implementation in 2015 will improve

throughput

408 554 330 533 724 832

Recovery CPI 2014 Forex Oil

Rand per Pt oz 13,854

2015 Grade

12,970

2013

• 2%

14,123

Productivity

Mogalakwena unit cost per Platinum ounce

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MNC = Mogalakwena north concentrator

Stay in business capital

Stay in business capital spend

• We are doing the right things with no long

term short cuts:

1. waste stripping to life of mine plan (2 new Komatsu 930E dump trucks purchased in 2016) 2. major maintenance programmes continue

• We are scrubbing approved capital votes with

significant cash savings and cash preservation already realised:

1. life extension of Unit Rig 3700 dump trucks 2. deferment of second rope shovel because of improved reliability of hydraulic shovels 3. exploration programme slowed

• We are applying smart design principles to
• ptimise current assets:

1. Blinkwater tailings storage facility rock containment wall redesign 2. equipment modification in favour of purchasing new

• And, we are approaching the debottlenecked

420koz platinum production aspiration without capital

388 648 244 211 138 171 677 2014 960 2013 1,893 1,984 2012 2015 Rm 1,742 72 1,216 96 1,552 1,164

Cash preservation and optimisation Waste stripping and maintenance

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Komatsu 930E build February 2016

Operating free cash flow

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• Operating margin of 37%, and an improvement year-on-year
• Annual platinum production increased by 24koz from higher head grade and improvement in recovery
• High grade base metal anomaly within North pit drove additional base metal production
• Business improvement initiatives impacted upon:

1. productivity (labour, drill penetration, loading, and payload) 2. maintenance reliability (trucks, shovels and drills)

• Capital reduction mainly from improvements to tailings dam design and deferment of some business improvement
• pportunities in favour of cash preservation (i.e. 2nd rope shovel procurement)

830 643 394 473 377 212 200 272 Recovery Grade Cost containment Stock sold +27% 2014 Oil Forex Metal price 3,660 CPI 2015 50 Other 1,952 1,299 Rand (million) Base metals 4,362 2013 2012 1,670 3,444 Capital reduction

Operating free cash flow

VALUE CREATION

34 Opportunity description

• Advanced mining technical project
• Increase hanging wall overall slope angle beyond 40°
• Reoptimise the life of mine plan

Approach

• Apply best practice slope design methods and built up

empirical evidence

• Realise incremental gains matching operational

capability

Value lever

• Significant reduction in stripping ratio
• Compared to current design, trade off same ore from

less overall movement vs. more ore from same overall movement

Time frame to implementation

• The mine plan of 2017 will include revisions to overall

slope angle

• Reserve publication in 2017

Slope optimisation

Cross section of Cut 8, Central Pit

N

Overall slope angle redesign value-risk trade off

Ore sorting

Traditional approach

35 Opportunity description

• Remove uneconomic material from mill feed

Approach

• Apply technology to reject waste and low grade
• re from mill feed

Value lever

• Reject 30-40% of feed mass; retain 85-90% of

metal at the 30mm to 100mm size fraction

• Trade off incremental capital expenditure for

increased throughput capacity with ore sorting technology

Time frame to implementation

• Proof of concept plant in operation at

Mogalakwena (300 tonnes/day )

• ABC studies underway with a view to commence

with pre-feasibility study in 2017

Pilot ore sorting plant at Mogalakwena

ABC = alternative business case crushers HPGR mill fine grind

Boikgantsho property

36 Opportunity description

• Early stage mining project
• Optimise the life of mine plan

Approach

• Include Boikgantsho into the Mogalakwena

mining rights area

• Include Boikgantsho resource into the
• peration’s block model
• Avail part of the Boikgantsho property for a

waste rock disposal facility

Value lever

• Extension of the Mogalakwena north pit limit to

access known ore resources

• Lower the average dumping height of the
• peration → significant capital and operating

cost benefit

Time frame to implementation

• Boikgantsho expected to integrate into the

Mogalakwena lease in 2017

Mogalakwena mining authorisation area Boikgantsho area Area of interest Plan view of Boikgantsho area

COMMUNITIES

N11 to Mokopane

Mapela Mokopane

Social performance climate

• Mogalakwena mine is established straddling

two traditional authorities

• Three communities have been relocated,

two in total and one in part

• Traditional authority intertwined with

democracy

• Old structures over time become efficient,

no longer all inclusive and lose effectiveness

• New structures emerge and seek legitimacy

– youth mobilised to take action

• 31st August 2015, Mogalakwena operation

was impacted by community unrest

• We have created new community

engagement fora and made immediate impact in local employment and in local business National road Traditional Auth. Surface lease area Mining authorisation boundary

P4380

46% 12% +9% 33% 38

KEY MESSAGES

Platinum ounces per annum

2013 341 2015 2012 305 2014 koz 392 29% 375

Key messages

1. The community is a priority for sustainability 2. The orebody is unique, we understand our business and we execute 3. Mine planning continues to identify step change value adding opportunities 4. Our performance culture is keeping us ahead of the change curve

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The team is excited about prospects for 2016

Q&A

THANK YOU

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